Bloomberg Businessweek Weekend-January 29, 2021

wild market moves thanks to the Reddit revolution. As retail investors and day traders man they went head to head with the big guys over game stop, Tim and a lot of others. We talked about this a lot this week. This was the story of the week, Carol, and I think it's going to continue. Look up. We were surprised to hear that FED chair J. Powell was asked about this this week. Two of the three people who asked their questions first, two of them were focused on game stuff.

We'll hear from the chairman and founder of Interactive Brokers on why they moved to restrict trading of these high flyers. Plus, I don't know when the next pandemic will come, but there will be another pandemic. Why we need to get ready for the next big virus from the CEO of Feinstein Institutes for Medical Research. It makes me so down. I know we're already thinking about the next one. I really need to And also coming up getting back to the high Seas, we're gonna need a bunch of patients

for that as well. We're going to hear though from the CEO of Carnival, all that to come. We begin with our cover story history lesson and what that may portend for today. We know that the nineteen twenties roared after a pandemic, so can we expect the same after the horrendous year of Bloomberg Economics editor Peter Coy writing about that for Bloomberg business Week and joining us along

with Bloomberg business Week editor Joel Weber. We put it to Peter and did a little bit of a historical analysis to kind of paint a picture of like, you know, could we have a repeat, you know, be like those twenties, and Peter w what did your what did you find? What was your conclusion? Probably not? I mean it would be nice right there are. Let me give you the optimistic take. First of all, there have been periods where productivity lagged and then sudden they jumped, and what the

reason is that you have some general purpose technologies. In the case of the nineties, it was the automobile, the internal combusting engine, which was used in cars and trucks, and electricity which electrification of factories and homes. Both those things paid dividends literally for years, even though it took a while before the big payoff came. So who knows, maybe the ninth twenties will be the decade that uh, you know, biotechnology and digitization, computers, artificial intelligence and so

on will finally start paying off big dividends. And you see some intriguing evidence the very fact that so many of us are working from home now successfully, the reflection of the ability of video conferencing, callud computing and so on. It's just incredibly uh productive use of new technologies. And then again in medicine, we have the very fact that these vaccines were concocted and just began to be distributed

within a year. It's just incredible. And that's based on some new technologies that will be used in other medicines and vaccines in the future. So that's the optimistic take. So I just want to stick on that for a minute before we turned to the pessimism, and we'll get to the pessimism. I also want to just bring us, like rewind to nineteen twenty one and the inauguration. Can you tell us about what that was like, because that

the similarities are sometimes cold and windy day. The predecessor in that case, Woodrow Wilson, was not on stage, although it was not because he had gone to Florida, was because he had a serious stroke and really wasn't very well. Um. The President, Warren G. Harding, spoke of unity. It was a time of high unemployment and the US had just gotten through a global pandemic, so a lot of parallels. It was a bit of a somber occasion and yet inauspicious.

And yet it's set the stage for, as we know, a take off the start of that summer when we emerge from a recession, and the rest is history. Electrification, as I said, the automobile, radio movies, on and on, indoor plumbing, labor saving. Yeah, those are all huge. Okay, So you gave us the optimistic case, Peter, give us

the pessimistic one. Well, the pessimist one is that we are have been stuck for a while in so called secular stagnation, which is a term that comes to the nineteen thirties, have been repurposed for the more recent period where we have kind of low productivity growth. We have

UM low interest rates. It seems as though there's an excess of savings over desired investment UM and that's reflected in extremely low We have negative real interest rates real mean inflation adjusted out ten years, which tells you that there's just people are pessimistic. The rich scott richer, and

the poor got poorer. In that case, the poor farmers did very badly in the nineteen twenties, and that was a time when the agricultural workforce was a much bigger share of the population than it is now, so it really affected a lot of people. UM factory workers did well because manufacturing was on the rise. UM In contrast, it was a tough period rural American general, A lot of immigrants had a tough time. It was very It

was women had just gotten the vote. Remember that was the amendment that brought women suffrage in nine um Blacks in some ways African Americans, Uh, we had the explosion of creativity and culture with the Harlem Renaissance and so on. But there's also a lot of discrimination against African Americans. Um, and there were race riots, there were lynchings, there was a Ku Klux Klan rally in Washington, d c. Um. There were some dark sides, and there were also a

lot of anti immigration sentiment. The nine Immigration Act was actually a role model for none of them. Adolf Hitler is horrible as that is to say, so, yeah, not all sweetness and light of the nineteen twenties. Look, Carol, whenever I hear anyone talking about the Roaring twenties and looking back on how great they were, we have to remember there was a lot of history there that doesn't get focused on, and remember how it ended right, not so well. So you've got to remember that, all right.

That was Bloomberg Business Week Economics editor Peter Coy writing about that for the magazine, and it's, of course the cover story this week. Joining us along with Bloomberg Business Week editor Joe Weber coming up the story of the week game Stop. We'll check in with the chairman and founder of Interactive Brokers, who moved to restrict trading on that stock and others. You're listening to Bloomberg Business Week.

This is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick takes Tim Steinovik from Bloomberg Radio. One big story of the week and feels like it will already be a story of the year when we look back in December. Yeah, the volatility and big moves that resulted also led to Interact a broker's group and other firms restricting trading of stocks that have run up

rapidly over the last week. We talked about that with Interactor Broker's chairman and founder Thomas petterfe Interacted by the way, a sponsor of Bloomberg Radio, we are extremely concerned about the continuing viability of intermedia. Is the clearinghouses and the brokers? Now? Why is that? Because every option contract there is a buyer and a seller. So the number for each number, each each option contract that exists in the world, there

is a loser and a winner. The broker stands between the broker and the clearinghouse stands between the winners and the loose. Us. The broker has to collect from the losers, give it to the clearing cause. The clearing cause gives it to the winners broker and gives it to broke winners broker gives it to the winning The problem arises when the loser loses more money than is in his or accounts. Right now, there are currently um three million

options contracts are standing on game. The average option contract I, since the stuff has moved around so much, I estimate the average option contract is verse about ten thousand dollars. So unert three million contracts, half of them are verse less, half of the verse on the average of ten thousand dollars. That's uh, that's fifteen billion dollars of the winners and losers, right. So now the brokers have to collect from the losers and pay to the winners if they can. They have

to put up their own money, right right. So uh, Luckily enough, we have a very large capital base of nine billion dollars and the automated liquidation systems, but many of other brokers do not have them. But but can I, if I, Thomas, if I can break in, and we should put out that Interactor Brokers is a sponsor Bloomberg Radio and Bloomberg TV. So it's not the case that traders were doing anything wrong or illegal. It's just a case of logistically there were going to be problems right

in terms of clearing houses. So that's more an operational problem versus a market problem or traders doing something wrong. Correct, No, no, no, not correct. So so short squeezes are illegal? Nah? When when you buy a stop for three hundred dollars that months ago was the failing company right there? You know, basically a second tend store for for video games. Right.

Uh so it wasn't really worse and it's not reading that two hundred and thirty dollars, right, So your only motivation to buy that stock, which you know full well eventually we'll go down to seventeen dollars, could be to join the short streets because why would this stuck go up? Why is it first two hundred and thirty dollars? It's first in hundred dollars right right? Are you? Are you guys closing out accounts? Are you closing closing out positions?

We learned just minutes ago that robin hood has told users that it may close some at risk positions. We have we have closed thousands of positions. We have we have twenty seven thousand customers who were involved in in GM stock, either via the stock or vias them of course many many of them, especially since we have tend to have professional customers, they tend to be at the short side. So yes, we close out many of those positions. And was a lot of the the positions that you

closed out of me? I'm curious about in terms of your business, how much is retail investors individual investors versus bigger institutional clients. So well, it's hard to spell our Our average client account is uh just under three hundred thousand dollars, so they are not your regular Moments clients. But of course many of them are smolder, are many of them are much bigger, But three hundred thousand it's just the average. We have one point one eight million customers.

So yeah, hey, you know, Thomas, you know it's hard, and I think we're trying to get our head about. I have lots of conversations with you know, big name shops too, and and investors who say, you know, we're increasingly trying to open up alternative investments to individual investors, give them access to the types of investments that the

bigger institutional clients typically have. And yet I feel like when a smaller retail investor to some extent, acts like one of the big guys, all of a sudden their hands gets slapped. I saw. I don't think that's true. So short squeezes are not legal not Maybe many of the long seers do not know that they are participating in a short screet, but uh that that that's the only issue I see that they inadvertently doing something that

they shouldn't be doing. But it's it's really stupid to look at the stock and buy the three hundred dollars and you know that it's a it's a little business, right, it's a it's a corner store, Thomas. We only have fifteen seconds for this. But are you worried that there's going to be a pr impact from this and retailer

traders will go to other trading platforms. I don't think so, because our professional customer understands that we have to protect the marketplace where day's sake and the money we have to protect. Do you think regulators just quickly twenty seconds have to get involved from Congress and others. I think unless regulators come out and say that trading should be in these stuffs for liquidation only, this is going to continue indefinitely and that's not good. Interactive Brokers chairman and

founder Thomas petterfe. We should note again that Interactive Brokers is a sponsor of Bloomberg Radio so well the investment community tries to understand the impact of the Reddit community. Tim, Let's not forget that so much of this year's environment really depends on getting the virus COVID nineteen under control. Right. We talked so often about how the recovery is so bound to the recovery of the virus. While doing so, though, we also need to be preparing for the next pandemic.

We will be better prepared if we learn from what we're going through. Now, this is Bloomberg, This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stellovan from Bloomberg Radio. So. In an annual letter, billionaire philanthropist Bill Gates outlined an ambitious plan to stop the next pandemic. Yes, folks, there will be another one. He's calling for a global alert system, massive testing, a contra of three thousand first responders ready to spring into action,

and tens of billions of dollars of annual spending. I know we're not even through this one, Tim, but we've got to start thinking about the next one. We're not and look, I think we should listen to Bill Gates. This is a guy who was sounding the alarm about the pandemic for years before. I mean, he knew this was coming, and he knew we weren't prepared. And look, one of our guests gets that and reminded us of the need to continue research into clinical trials and vaccines.

He's Dr Kevin Tracy, and he's professor at the Institute of Molecular Medicine fine Stein Institutes for Medical Research, also Professor of Molecular Medicine at the School of Medicine at Hofstra north Well Health and north Well. We know is a massive hospital system and they've seen the strains and stresses of COVID nineteen really from day one. And he talked to us though about what he's seeing in terms of the virus, especially when it comes to those less fortunate.

The virus has has been a brutal to those in lower income neighborhoods, multiple housing units, and to the elderly. And there's an enormous opportunity to double down in in what has to be done to vaccinating those populations as well as looking at new therapies that we're going to continue to nave even after the vaccines have been have

been given out. Dr Tracy. We we're seeing some conflicting news right We're seeing lockdowns and restrictions being I shouldn't say lockdowns, but restrictions being lifted in certain parts of the country right now, California, New York. Well, at the same time, new strains are being discovered in multiple places.

What's the right approach here for for local states to take the right The right approach is to follow the masking of all individuals, maintaining social distancing and handwashing, and to focus on a coordinated deployment of the vaccine as soon as the supplies are available. That's the science based approach. Well, and it's interesting too, you know, I think we're getting back to that core. And certainly Dr Fauci has been impressing that the importance of tim we saw it. Certainly.

I feel like over the weekend or since the new administration has come in, you can almost see some relief among Dr Faucci is just being able to focus on the medicine. He definitely does. He definitely does um and listen the science kind of reveals all in terms of what we need to do. Dr Tracy, We we sort of tease that you wanted we're going to talk about the next pandemic. And it's surprising to me that we're already thinking about the next pandemic. We haven't even gotten

through this one yet. Um, are we going to be better prepared, hopefully for the next pandemic? And why are you convinced their? Well, when do you think the next one would be? I don't I don't know when the ex pandemic will come, but there will be another pandemic, and in fact, we will be better prepared if we learn from what we're going through now. So UM, there's there's a couple of ways to think about this. UM. One way is to think of it as a spun

Nick moment. When Russia launched its first satellite, it terrorized UM military leaders in the US and it terrorized civilians because it was unexpected and we were unprepared for for a space race. But we we as a country doubled down and led via an invest major investments in science and research. We put a man on the moon before the decade was out. As as JFK S the country to do we we it's because the country reacted in

a cohesive and organized way to US perceived threat. We need to do the exact same thing now for the COVID response, by investing more in in federal dollars invested into research. Because this was not a surprise, Okay, this this was an expected event. Well, and forgive me for jumping in because like someone tweeting at me and saying, listen, we've had the swine flew in oh nine, we had the Russian flu of the seventies, Hong Kong flew the late sixties. Um, you know, we've had flus along the way,

and we've had viruses that have been really difficult. I guess I mentioned it because I agree with you that the country has to focus on it, but the world really has to focus on it. Right, If we're going to really get these under control, especially with the amount of flow and movement between countries, um, and our economies depend on that, it really has to be a global effort.

I agree, Carol, global effort and a global focus would be ideal, But we we may not be able to control the global focus, but we certainly have to double down on the US focus. In two in two thousand and three, after the first Stars outbreak, I actually was invited down to Washington and a very small panel and we modeled what would happen if exactly of IRUs like COVID coming out of UH China or Asia began to infect Americans. And the models we used were more lethal

than the current virus, which is not very lethal. The models we used projected of the United States would have been would have been dead by now if if so so, this was not a surprise, and I was one of dozens of participants in reports recommending preparation for pandemics. Does Dr Kevin Tracy, Professor at the Institute of Molecular Medicine at the fine Stein Institutes for Medical Research, Professor of Molecular Medicine at the School of Medicine of Hofstra Northwell

Health listen to him. It's all about listen, We've got to get through this one, but we've also got to think about the next viruses to come. And look, I'm optimistic that because we are living through this one, because we are getting through this one, we will see the other side. We're going to be able to handle the next one much better. We're learning a lot. I certainly hope. So you're listening to Bloomberg Business Week up next. It's been a tough time. That's a that's a very difficult

time for travel and leisure. Health concerns continue to plague progress towards getting cruise ships back to see. We'll hear from the CEO of Carnival. That's coming up next. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes. Tim Stinovic from Bloomberg Radio. I know to be able to travel, Carol, I am, I cannot wait. I mean I haven't traveled in a year. Um, raise your hand if you need a vacation. Okay, we're both raising our hands.

Let the record show the whole audience has raised their hands as well. One of the hardest stand industries, Tim, we know by the pandemic is anything and everything to do with travel, and definitely the cruise industry. So to find out what kind of year we can't expect in the cruise industry, there's probably no one better to speak to than Arnold Donald. He's President and CEO of Carnival Corporation.

You caught up with him at Bloomberg's the year ahead of virtual Summit, and in this excerpt you talked with Donald about what it feels like to be a bell Weather and the outlook. Of course, it's been a tough time. It's a it's a very difficult time for travel and leisure UM, and obviously difficult time for cruise. You know, we voluntarily paused way back in March of and here we are in January of twenty one and we're still not sailing. We've had a few sailings over in Europe,

but you know, very limited basis. So you know, they have a business with no revenue for such an extended period of time and a significant burn rate because obviously we have to keep our ships operational. You can't set these ships up to not airplanes. You can't just put them in a hangar. You have to continue to operate them. And so it's been very challenging. On the other hand, UM, the company has proven its resilience. Are people have been fantastic.

We have raised over nineteen billion dollars of capital in the past few months, all virtually nobody in an office, not our people, not the investors, not the bankers, not the lawyers, UM. And so some extraordinary things have happened. Plus we got ninety thousand crew Ris Carroll back home at a time where no flights there were, you know, borders were closed, et cetera. So that was a major ideal not to mention in the early days, two fifty

thousand guests plus as well. Hey, what I wanted to ask you, because I feel like, go back a year ago, you folks, Carnival, the cruise industry was seeing I think the depth of the magnitude, the seriousness of what this virus was about right you were seeing it. Certainly, you had passengers on the ship, you had employees you had to deal with. I just feel like you guys got

an earlier window into how serious this could be. Do you feel like that there's any early windows that you're seeing right now that maybe the rest of the world is not. Yeah, I don't know if we really had an earlier window, but clearly we were impacted because when countries closed their borders, we had ships at sea because this was evolving, nobody understood it. People were shutting down and we had to get people home. So that was

a major episode for us. Our excuse and maybe that's what I mean, and maybe that's what I mean is that you guys really felt the impact pretty quickly, pretty swiftly before a lot of other folks didn't. A lot of other industries did. I think our return, unfortunately, is probably going to be slower than others. UM. And it's because we have so many If you take a cruise,

you go somewhere. So everyone talks about c d C, which of course is critically important in terms of having you know, the confidence of CDC for us to sail. But we have to go to destinations. Those destinations have to feel comfortable. Uh. And we're not gonna be able to start all that once. We're gonna have to stagger our start. We'll start with a few ships at a time,

et cetera. And so we'll be slower coming back, but we will come back, and depending when, Um, it's in the best of public health, you know, to sail here in the US and elsewhere in the world. UM, we're cautiously optimistic hopeful that we could have nearly all the

fleet back sailing by the end of the year. UM. But obviously whole tells and schools and other places where there is UM congregation of people are going already happening, and so you know, they're kind of in front of us in terms of being able to see when things are coming back to normal. You guys announced some extending some of your pauses on your departures in the United States. So do me a favor, Arnold, take me to you know, your first US depart your post COVID. What does it

look like? And when do you know, fingers crossed? When do you think it might be? Yeah, well, those are great answers. I would love o great questions. I love that answers too. But the reality is, you know what it's gonna look like is um you know, obviously there's going to be enhanced protocols on board health protocols because in this time frame, even with the advent of vaccines, even with the acceleration of low cost, rapid, more accurate testing,

even with the advancement of treatments. UM, you know, COVID is still still out there and about and still impacting people. And so we're gonna have to have elevated protocols for a period of time. Physical distance, what does that look Yeah? What does that look like? Yeah? And and think and good news as we've done it now and in Italy and Germany, for example, And so the guests, for the guests, they have a great experience, but they are wearing masks.

You know, there is an attention of physical distancing. It looks like when you go to the grocery store wherever you go now and there's a little spot on the Floria says, you know, stand six ft behind the person in front of you or something, or in the airport or whatever. So so that's what you know. It's going to have those kinds of feels to it, but it'll still be a cruise. People will still be experiencing new

places and new people in new destinations. Um, you know, we had our very high net promoter scores, you know, guest satisfacshition scores on the cruises that we had in Italy and Germany. I have to say, and you know, you know I spent some time with you guys went on a cruise, just kind of went out on an overnight. But you know, part of the fun is there's a lot of people on those ships. I mean they're massive.

So I do wonder does the new protocol mean that you have to limit the amount of passengers you have on a ship at least for some time. Well, we'll have to see. I think initially that will probably happen to a degree as we practice the protocols with the crew and get them used to handling everything. We certainly

did that with our early sailings in Europe. Um. But the ships are vast, as you know, you've been on them and so you know, and so the most important thing is not how many people, but in those situations where you can have a congregation of people, um, you know, is there adequate room for distancing? Can we distribute which we can for dining and other things to have the physical space like you having restaurants square and in places

where you're allowed to eat inside the US today. And so there will probably be some limitation based on those types of things, but maybe not as much as people think. You know, our ships initially will start slow, but chances are we'll be back to relatively for I can see just with different practices. Are you going to require passengers who get on the ship. Are you going to require employees to get COVID tests? Are you going to require vaccinations?

I'm just curious how that comes into playing universal testing right now. It was required for the cruises, absolutely the ones we are operating. Vaccines are new, and so we have to see where that evolves. And we're gonna listen to the medical experts around the world, just as we have on everything else, UM, you know, the science and medical experts around the world, and then determine what makes

the most sense. UM. You know, everything is still evolving, as you well know, UM that you know, there's still a lot of questions and unknowns. UM. But yeah, we'll we'll do whatever is in the best interest of public health and UM. And you know, we don't want to do anything. We never have historically in the industry and our company certainly not UM to do anything to compromise

public health, and we certainly aren't in this situation. Is there a little part of you, Arnold that is at all worried that looks a lot more like twenty then maybe we're all setting up for well, here's the differences I see that caused me not to feel that way I feel early on in twenty one. You know, obviously we're having a hangover of that kind of a and uh question about that, UM, But we have vaccines and we didn't UM. You know, we have some in hance

treatment protocols that most of we didn't have. We have much more testing availability and rapid testing and a more accurate testing which in most of we didn't. We have a much better understanding. Although we're not fully knowledgeable about the virus, we have a much better understanding of the

virus where we didn't. And so when I look at all those things, yeah, I see twenty one, you know, with with some optimism, but at the same time realizing we have to continue to you know, let things evolve and study and pay attention to the science first and then secondly, you know, to our societal ability to you know, um, both function as a society and have people feel comfortable in that function. You mentioned at the top that you guys raised nineteen billion dollars, there was debt, there was

equity raises. Um. That puts you guys in a great position. It's really pretty impressive. And and do you feel like Wall Street has acknowledged your ability to do that? And I do wonder do you anticipate that you could do that? You have to do any other kind of capital raises here? Well, you know what we've said, you know, public day Alvius at this point is we have raised over nineteen billion dollars and that gives us a runway. It gives us liquidity to make it through all of twenty one with

zero revenues. So we have no revenues for the full year. Um, you know, with a pretty healthy burn rate given the number of ships we have in everything, and we can get through the years. So so that gives us time. And in terms of UM, and we've already published that we have additional capacity for debt um obviously. UM. As we move forward, we'll pay attention to the balance sheet and if we determine it makes sense, well, you know,

we can do additional equity rays if if we need to. So, so we have some flexibility, which gives us confidence we can sort of weather the storm. And um, you know, it's not without sacrifice. It's not without some pain. Um. You know that was raised that you know, pretty aggressive rates and so on and so forth, given the time and what the markets were like at the time. The market today seems to be you know, somewhat better and so on. But but the bottom line is, you know,

it's not what our pain, is, not what our sacrifice. Yeah, listen to him, It's all about getting it under control. Everybody is looking forward, but again there's lots of questions about how long until we get there. I'm ready to get there too. All right. That was Carnival President and CEO Arnold Donald Cash. That entire conversation. It's in our extra podcast feed. You can find that at Bloomberg dot com, on Apple or wherever you get your podcasts. That wraps

up the first hour of the week. Get edition of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser and I'm Tim Stanovic. More ahead in our next hour, including fifty companies to watch for in plus how the my Pillow CEO will not stop trying to prove that Donald Trump got cheated. You're gonna love that story. Also the US CEO of Colliers International, I'm working from home and

whether it's here to stay. We're going to talk about real estate and an iconic guitar company on surviving nearly two centuries. This is a fun one, Caroled, This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes. Tim Stenovy from Bloomberg Radio. Hi, I'm Carol Masser and I'm Tim Stanovic from Bloomberg Quick Take plentyhead in our second hour of the weekend edition of Bloomberg Business Week, including commercial real estate. It was hit big

time from the pandemic. We'll talk about what stays, what goes with the US CEO of Colliers International plus Carrol this story headline really stuck out. Why pillow King Michae Lindell is never going to rest or shut up. You're gonna love that story. And the CEO of the Martin Guitar Company on the Earth guitar it's a thing. First up, though, let's take a look at some of the Business Week

fifty Companies to watch. The list it is compiled by our Bloomberg Intelligence team, who talk about two thousand companies and fields including finance, retail, energy and technology. RBI team consider such factors including companies size and growth opportunities, management changes, scheduled release of noteworthy products and services, and of course, the impact of the COVID nineteen pandemic and other seeping economic forces. Bloomberg Business we get it, or Joe Weber,

he's back with more. There's way too many companies for us to figure out on our own, and they basically take the you know universe of the two thousand companies that they track and basically put it through their spreadsheets until we come out with fifty that we think are really interesting to watch. And watch means not just UM buy or sell, where we have to be a little bit more ambivalent than that because they can calls. But

investors and readers have definitely noticed. I've had a portfolio manager paying me before and say, I'm not sure if you knew this or not, But like forty of the companies that are on this this year's list, this was a year back. Um, we're out performing their benchmarks. UM. So it's you know, if you knew what you were doing, you could go along on a few and short some others and and probably look pretty smart. Past performance is

no indication. It's true. It's true, especially not right now. Yeah. So, Joel, what what is sort of the common thread that that runs through these fifty companies? I mean, because you have consumer staples on here, you've got materials, you've got healthcare, you've got Boeing on here. UM what ties them together. There's a couple of themes that I've noticed, UM, that

I thought we were interesting to comment on. One is UM travel UM, and I think you can see this with you mentioned bowing there UM now that they're on the other side of of the max Um debacle. Uh. We we once we see travel start to perk up, we expect that um, that that plane will be back in business, which will be UM, you know, a huge deal for for Boeing as well as for airlines. There's also a couple of airlines on this list that I think are really interesting becauld Pay Pacific being one, but

also Whiz Air. UM. There's another article in UM this issue about European airlines where where Whizz operates UM and Whizz was sort of a breakout before and sort of all eyes on them to see if they can come back to it. UM. So So I thought that travel one was interesting because you know, I think we all sort of uh innately expect that to be a sector that, you know, the moment that you're vaccinated and able to travel, I think a lot of people will uh yeah, sign

me up, sign me up. Hey. You know what's really cool too, It's it's some household names, and then it's some companies that we don't really talk a lot about. Uh, And that's what kind of makes it come you've never heard of some of these companies, right, like and that's I've never whizz air. Yeah, I mean if we if we only told you about g E S, it's like, yeah, right,

start providing some service. So so we really try to dig when we put this list together, so that it's you know, you get a combination of ones that you've heard of A B and BEV for example, but we pair that with uh, you know, not only an international um quotient, but but just sort of the sense of discovery, so that you know, everybody has heard of Tesla, but you know, perhaps you haven't heard of, you know, somebody

like Ablemarle, which is in the lithum business. And if you're looking for e V exposure like something like that makes a lot of sense. So it's just and I'm just gonna tell there you go, and now you can talk about it, you know, over the weekend whenever you're you know, having remote dinners with friends or whatever. Um. You know. But back to the other themes that I thought were really interesting. Another one, I don't know if you guys noticed this, how much China plays are rolling

here um and and their domestic companies. Uh, there are companies that have exposed more international exposure. But when you go through the list, it's really impressive just how much China factors into everything. Yeah, are there other regional variations here? I mean did you did you sort of put parameters on when you talk to the team at at at Bloomberg Intelligence, or do you say, hey, these are two thousand companies. UM, we want to know which fifty you

think should be on the list. So we we do have UM. We basically just want to make sure that we have regional exposure. So if we if we talked about fifty and didn't account for for Europe or Asia especially UM off this year, we you know, it wouldn't be an interesting list. So so we definitely we don't set any hard rules. Uh, we kind of let the data speak, but we definitely just make sure that we we have that regional exposure in addition to everything else. UM.

I do think like that. I think we're a little overweight on on Asia. UM. And that is for a good reason because, UM, you know another company that you know totally was an obvious one when you kind of sit back and think about it, was like Nintendo, right, Nintendo is um got a new switch coming? We're all still locked at home and looking for you know, new

consoles that we had. You know this, any Microsoft war tends to kind of lead first, but then Nintendo comes from behind and everybody ends up playing Switch, it seems. So we'll see if that one proves true. Um. So, so that's just another The PayPal one is interesting because we've seen, you know, there's so many players there, but then it's a it's a it's a space where it feels like entrenched players. It's like like a PayPal may

have sort of an unfair advantage. Um. So, the fact that they've navigated so many security stuff for so long that everyone's paying remote already. Uh, they seem like a really interesting one to keep an eye on. Um And the numbers there are just really interesting to see, you know, sales growth, you know, go up. It just told the circumstances placed straight to them. Well and speak of sales growth. Twilio Jeff Lawson, co founder CEO, get a new book out UM and we talked about some of that growth.

I mean, they had an unbelievable and he's pretty upbeat, you know, once again, but it's a name that we've talked about a lot here. Joel. Yeah, they're interesting. It's a it's a that omni channel play a super convenient business software. That was Bloomberg Business Week editor Joe Weber. Check out the full list and the metrics by checking out the yearhead issue online at Bloomberg dot com and of course, on the Bloomberg and Tim a few real estate related companies. They are on that list of fifty

companies to watch. And speaking of real estate, we're going to check in with the U s CEO of Colliers International get some ideas on how this year is shape en up. This is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stenovan from Bloomberg Radio. Carol COVID has shuttered thousands of US restaurants, gyms and stores. It's kept office workers at home, It's left hotel rooms sitting empty. All of that, of course,

leaving commercial real estate trying to rebuild a solid foundation. Yeah. Tim, there's definitely been winners and losers when it comes to real estate and the impa the pandemic has had on overall real estate. And to help us understand exactly where we are, I caught up with the U s president and CEO of Colliers International. We're talking about Gil Barack, and like so many guests, we had to kick things off talking about what does the world has been like

and where we are one year into the pandemic. Look, I think we're doing fine. It's been a long year for all of us, or along eleven months, um, and I think that, you know, sort of where we are. We're closer to the end than the beginning. That's the

good news, right. The vaccines are rolling slowly, but they're rolling, and I think that most people are quite encouraged by that and encouraged about the fact that we should be returned to some sense of normalcy by the middle of the year and into the back half of the year. And so things are looking up. And they didn't end as badly as some might have predicted, sort of when the crisis hit us in March and April last year, there was activity, uh and there was some sense of optimism,

you know, again towards the end of last year. Clearly we didn't perform last year like we did in two thousand nineteen, but things did gradually start to get better and that trend seems to be continuing. Is that true? Around the world. I mean, I knew you focus on US properties, but you guys are international. Is it kind of the same story everywhere? It depends on the market. I mean, I know real estate is location, location, location,

and it's a very local story. But I'm just curious. Yeah, I know everything I've heard and read from my colleagues, you know, across the ponds, um is that they're feeling sort of generally the same way. There is enthusiasm, activity is picking up, um and UM. You know, their their pockets. Obviously, there are things within the industry, things like industrial, which I think is fairly common now than anybody that follows

the space. Industrial real estate is having. You know, COVID has been a silver ligning for them, right It's it's been because of e commerce, and you see this globally, the demand for that type of real estate has really been the opposite of most other types because of the the e commist growth. Are you seeing any bankruptcies with any of your properties, Because I'm trying to get my head around that, because I think that was the story we thought was coming was coming was coming in uh

and and expectations as restaurants shut down, as retail shut down. Uh, And I'm just curious, are you guys facing some bankruptcies with any of your properties or are you seeing any of that? We really it's really diminimous. Um. There was a lot of talk and this is not dissimilar to two thousand and two thousand nine, that the stress debt is coming, the the special servicing needs are coming, and it's going to be a wave, and that wave didn't happen. Yes,

they're clearly there are properties that are distressed. There are there are problematic situations. They are higher than what are they normally are in normal times, But it hasn't been at least from what we've seen, it hasn't been a

huge wave yet. Um. I don't know what the next few months hold as stimulus checks are coming out again, but whether you know, if if we don't see some improvement in terms of of stimulus and in terms of the crisis receding through vaccination, right, then the longer it goes on, the harder it is going to be for people to keep going. But so far it's been manageable. Easy for me to say, right if not, if I haven't been a directly impacted, well, I mean, does that

change does that any of that. I mean, you say that you see that we're closer to the end than we are at the beginning. But I do wonder do you think that there will still be some fallout of properties just because the world is changing when it comes to real estate. I think they will be. And I think it would be you know, remiss of me to say that, or putting my head in the sand if I didn't say. Look, I think the way that for example, office, that's the big elephant in the room, right, how is

office going to come back and in what fashion? And how is demand going to be? Well, it's it's it's a mixed bag. You see some new developments that are fifty and sixty and sevent already pre leased, and I think it depends on where they are and what type of um you know, office space you have. So new

is generally good and popular. Old is probably going to struggle more, um you know, because we will work a bit differently, and I think we will see people working more remotely than they have historically, and that the trend will be a downward trend in demand, uh, you know, offset by when the economy recovers and stoughts to go again, and there's more demands for space, So there are going to be some lasting impacts, particularly I think in the office arena. So gil, let me ask you, um, offices,

wide open spaces, right. That has just been the thing at Bloomberg. It's been in our culture from day one, this whole idea of open spaces and no real offices. Um. And then we start really take off with all the tech companies. Right, it was the cool thing, the right thing to do, and everybody got away from offices. Will we stay with it? Do you think that changes significantly? Yea.

In the short term, conventional wisdom would suggest that that's probably not a good idea to be death sharing, right and to be so us to each other without some kind of plexiglass separation. I think it remains to be seen because if you reconfigure officers, there is a capital cost to doing that, and I think that in the short term, anyway, my own senses, we can manage it a different way. So, for example, have half the employees come in on Monday and Wednesday and the other half

on Tuesday and Thursday. A lot of people want to work remotely a little bit anyway, after the pandemic and that's sort of you know, and a lot of people can work remotely quite effectively. So I think we're going to come back in stages, and it sort of does remain to be seen what the long term holds. I think we'll get back to it. I think there is a camaraderie and a productivity to having open officers. I think people like it and have gotten used to it.

And if we weren't for the pandemic, uh, you know, nobody would think twice about it. So there'll be some I think, some short term, short to medium term restraint on that type of setup, but I think over time we you know, we can evolve back to it. Particularly the vaccines are effective. All right, So what about retail. We just did a story about a mall out in Vegas, um and it's not a new story deal, right, Like we've been talking about it for a year, Were overstored,

were overmalled, uh. And I do feel like mall developers are getting a little bit more strategic in terms of where they put them all. So what's what what do we continue to see on that front? Yeah? So I think you know, retail is um. It has obviously suffered and that and and it has for us, as you say, and the pandemic obviously accelerated and deepened debt suffering, if you will. But I think that malls that offer an experience, and it used to be that you think of that. Okay,

that has to be an outdoor mall. Not necessarily so, because you have some of these new malls that have been developed unfortunately maybe not quite gotten off the ground because of the pandemic. But they have attractions, whether that's roller coasters or attractions to kids or whatever it is. Uh, those draw crowds and of course then they shop right And so I think if it's a new mall, if it's an exciting mall, if it's in a good location, maybe good restaurants. When we get back to normal, those

I think are ultimately going to be fine. The malls of the type you're talking about in somewhat of a remote location. It's not entirely remote because a lot of cards is a lot of card classic and outlets. People would stop on the way to Vegas. It makes sense. But they're not surviving very well in the pandemic. That was gil Borrock, the U S President and CEO of Colliers International, still to come on Bloomberg Business Week. What's going on with the pillow King? He is CEO Mike Lindell.

So many questions about the pillow King. This is Bloomberg. This is Bloomberg Business Week with Carol Messier and Bloomberg Quick Takes Tim Stinovin from Bloomberg Radio. Pillow King Mike Lindell, Well, you know him from those late night commercials. I kinda say he's never going to rest or shut up, at least according to the story in the magazine Look, as reporter Josh Dean notes, you can laugh at him, shun his business, sue him. The my Pillows CEO won't stop

trying to prove Donald Trump got cheated. Just joining us on the phone in New York along with Bloomberg Business Week editor Joe Weber on the access line in Brooklyn. Backstory here. Four years ago, Josh Dean wrote basically the definitive story on Mike Lindell and just the preposterous business success story. Um that that is my pillow and this is a guy who went from basically being a crack addict um to an unlikely entrepreneur with actually like a

pretty successful business UM. And Josh actually did that story four years ago for the magazine, and it happened to coincide basically with the first couple of visits that Lindell

had with Trump. And obviously, if you know anything about Mike Lindell, the past four years, UM had become much Trumpier UM, let's say, and so when the administration was in its last days, we've kind of reached out to Josh and said, what do you what do you think about getting back in touch with Mike Glendel And so that led to a pretty memorable conversation that Josh had with him in this feature. Um, Josh, what was the what was the opening question? How did the conversation start

with with Mr Lindell? I don't even know if I needed to ask a question. I think I think I did, said hello, off and running started just going. I mean that man is um I think I said in the original story. You know he's been off cocaine and crack now for a long time, but it's like his body is permanently stuck in up in a cocaine mania. Like I don't think he's used Duggs in a long time, but he talks like someone who who maybe just did it for so long that he can't he can't control

himself anymore. Well, so listen, though he's definitely an ally of Donald Trump, we know that, and you lay it out really well, why has he continued to be so adamant despite the court cases that have shown that there was no fraud in the election. Why has he and I know this is when he was off and running and talking with you, Why has he, though, continue to

say there was fraud? I mean, he's he's just one of those people who are so convinced of something that no amount of information evidence would ever change his mind. I mean, he would tell you, you you know, for hours on end that he's convinced and that he has this you know, quote unquote forensic evidence of machine hacking and all this stuff. And unless he's completely doing this for show,

and I don't think that he is. He truly believes that, you know, he's here to save Donald Trump's presidency and to save democracy. Well, Josh, I was so surprised to read that he's not concerned at all by this, uh what you call a big danger, the dominion voting systems having threatened him with a defamation suit. Uh you write that a decision in Dominion's favor could destroy my Pillow as a company. H Why is he not concerned about this?

This is a big deal. Yeah, I mean, here's probably the the most convincing evidence that he truly believes what he's saying, that it's not some kind of act, because yeah, I mean, this is a potentially an existential threat to my pillow, like a decisive judgment. And we're talking like, you know, I think Dominions going after these these defense for hundreds of millions of dollars. If they choose to sue him, um, and he loses, then he could lose

the company. But he thinks that he's right, so he believes as he as he tells it, I'm going to go to court and I'll present my evidence and I will prevail. I mean it's from the outside objectively, it seems crazy and self destructive, but he doesn't see it. Lay, Uh, what do you have to say about how his business has been doing? Because there was this photograph taking taking of him, uh leaving the White House with what appeared

to be um some papers that referenced martial law. Uh, and and I'm curious, like, hey, what do you say about that? And then be how is how his business been doing well? The martial law thing, he said that was we're not his notes. So basically he was going to see Trump to present his you know, quote unquote evidence of of like election fraud, and then a lawyer front of his if he wouldn't name, gave him a second set of notes that included um that martial law reference.

So he's like, I don't even know what martial is. That wasn't me. Um. As for the business, he's you know again, he thinks that this is good for his business, and it may be. I mean in the short term. He says, sales are up, he's hiring more people. He's actually added floor space because you know, I think there's probably everything is political today, right, so people maybe buying pillows as a reaction to what they see as like left wing blowback. Yeah, it's interesting. Is he really a

buddy of Donald Trump's? No, I mean I asked talk he talked to the President? He said no, It's like I don't have his pon number. We've only met a handful of times. But I mean he loves he think Trump is amazing. That was Josh Deane reporting for Bloomberg Business Week. See if you can spoil this one. Al Right, everybody, grab a snack, a cup of coffee. Good to know, because coming up, we're going to check in with the head of an iconic brand of the music industry that

survived check us out, Tim nearly two centuries. Yeah, this is the one I know you were very excited for, Carol. This company makes guitarist used by some of the biggest names in the history of music. I'm talking Eric Clapton, a Bob Dylan, Johnny Cash, Elvis Presley and more. You're listening to Bloomberg Business Week, that's next. This is Bloomberg, do you This is Bloomberg Business Week with Carol Masser and Bloomberg Quick takes Tim Stinovik from Bloomberg Radio measure.

So that's the weight by the band, the lyrics I pulled into Nazareth. Well, that hasn't do with Martin guitar and where it's based. Robbie Robertson of the band noted that once Tim, while searching for inspiration for a song, he actually looked inside his Martin guitar. I loved this story. He saw the words made of Nazareth, which happens to be with the Martin Guitar Company is baby, Carol. I had no idea until I heard that, you Google amazing.

Chris Martin is CEO of the company. He took over from his grandfather, keeping the company all in the family. I am the sixth generation. I'm C F. Martin. The four two of my ancestors were named Frank for some reason. Okay, because I was doing some research and I was trying to make sure I had the count right. How are you And what's the past year been like for you guys? Well, you know, um Pennsylvania, the governor basically shut the state

down in about a week. So every day which like, Okay, tomorrow we'll do this, and then tomorrow was like, oh no, we're going to do this and this, And by the end of the week we were closed. And I thought, I said to my colleagues, says, I've been through guitar booms and busts for a variety of reasons, often economic, sometimes cultural. And I said, all right, let's just go

for a break. Even if we can, you know, we'll bring the business down will unfortunately, you know, we have to lay off a bunch of people that will get unemployment and we'll go to break even. And then all of a sudden the phone started to ring. And it turns out that when people were stuck at home, they really wanted to buy a guitar. Did that that was that April May? Like how quickly did that start? So February March. By April we kept petitioning the governors, like,

the governor, people want our product? Can we can we go into the warehouse? Can we just get a half a dozen people into the warehouse to ship the product that's on the shelf. And they said, okay, only half a dozen with protocol were a masked, take their temperature, social distancing. And then we put together a protocol. You know, we have a forty pag age book about this is

the way we're going to reopen the business. And we showed that to the State of Pennsylvania and they said, huh, all right, you seem to be serious about wanting to get back into business. And I think that will help allow the State of Pennsylvania to say, hey, some of these firms that are really trying to be diligent about the virus should go back to work. So I've been working from home, but my dedicated colleagues who actually make the guitars are in the factory making guitars because we're

back ordered. Okay, so let's talk about the kind of demand that you've seen. You're back ordered. Tell me what normal order is in a non pandemic world. Have bit we're like for you guys, and then what it's been like post pandemic and everybody's like, I'm home, I want to play guitar. So you know, from you go from Obama to trumpaconry has been pretty good and so you know, we benefit, you know, and people have some discretionary money.

But this demand, and it's not just Martin. Everyone who makes some kind of musical instrument that you can play at home right now, they're back ordered. We're all we're all scrambling, We're all like, okay, we're trying to catch up. And and the real challenge is to allocate the scarce product that we have uniformly across our customer base around

the world. Well, that's interesting, right, because you have global demand. Um, how many give me an idea where you know, Bloomberg weret into you know, how how many guitars and I know you guys have a bunch of different guitars, But how many can you produce in a week? And it's it all handwork, or it's a mixture of hand and

it's a combination. My family's business has always respected technology, and one of my competitors I al ways say this honestly, Bob Taylor got to jump on us in terms of using computer numerically controlled routing machines which really make the early part of the manufacturing process very efficient. And we got religion. So I often joke when I give a factory tour that my ancestors if they could come back and see the factory that lay left me, their head

would spin. Maybe, but they are ultimately they are put together by hand, right was no one. I don't care where you make guitars. No one has invented the guitar put it together machine. I love to get an idea of a business like yours. And you say you respect technology, and so it's a combination of technology and people putting the guitars together. I think you said you get about a hundred and eighty five out in a week. Talk to me a little bit more about that. Well, we

have two factories. We have the main mothership I call it in nas. You know, my great great great grandfather started his business in Lower Manhattan at eighty nine, moved to Pennsylvania and then early in my career Crutton Street, if I recall, if I read it right, we opened up a sister facility in Mexico and Kia doora and so at that facility we make all of our Martin guitar strings, and we make what I'll call a medium Martin guitar, and so we actually do more volume because

the price is lower. So we're doing about fo units out of that factory a day. Wow, that's I don't know where they're all going, but they're going somewhere. Well, it's interesting. So what do you expect? Do you you know, anticipate? I mean, you've got to feel good about the demand that we're seeing. You wish it was not against a health pandemic. But I think one of the things that we ask about a lot of businesses is do you

anticipate that this continues? Because once the world opens up right all of a sudden, we have a lot of challenges for our time. Again. So yes, a good friend of mine, Brian Majesty. He and his brother have a trade publication music trades and Brian was involved last week in an event at our virtual trade show, and Brian made the prognostation whatever that word is. You know, he likes to analyze data and then from the analysis kind

of tell you what he thinks might happen. And he said, I think that people, not everyone, but enough people are going to continue to work from home, maybe not every day, but often enough that they will still want to buy guitars because they have some free time. You know, in between work you're doing you're doing zoom calls all day. You've got twenty minutes break before your next call. And how many times have we seen we're seeing you know, someone on TV and doing a zoom call and in

the backgrounds of guitar a lot of times. Yeah, so they pick it up. They got twenty minutes to just do something else and then go back to work. Well, I have to say my husband loves to play guitars, guitart. He has a few of them, Um, and he's got you can never have enough. I know that. That's what he tells me. I say that about shoes and that's why we have a happy marriage. Um. But he has a Martin and the acoustic sound is just pretty incredible.

I think it's yeah, and it's just a beautiful sound. Um. You know, it's interesting too that I wonder and talk to me because you guys to a lot of things that we've talked about over the past two years, companies innovating, being disrupted, and I do wonder whether it's digital online if you're seeing you know, you grow your business that way even more because of what's happened the pandemic, And talk to me too about you guys are creating an

earth guitar or an environmentally friendly guitar, which I think is another bigger trend that's coming out of the pandemic that we're all thinking a lot more about, especially as the world shot shut down right and all of a sudden there was clean air. We're just so the fires in California like they were just thinking a lot more

about our environment. So the first question what we've seen at the retail level is the retailers that already had a robust online presence have done better than the brick and mortar retailers. Some do both. Some came from a digital world and then did brick and mortar. Most came from brick and mortar and did did the digital world, but the ones that can do both because people are going to want to go back into a music store.

There's something about hanging out in the music store, playing the guitar, talking to other guitar players, maybe buying something. But in the meantime you can't do that. The other thing what I've seen in just in my career is that, you know, we use these are called rare exotic woods for a reason, and we need to find alternatives and we need to take better care of the rare exotic woods. And so we've partnered with the Forest Stewardship Council and

they audit us. They come in annually and they want to make sure that when we say we've bought this would legally, they come in and they say prove it. We want to see the paperwork, we want to see the And so that's what the Earth Guitar is. It's a way of us saying you can buy these rare exotic woods, and you can buy them legally and correctly. And and that's that's what it's really all about. Is there's still illegal logging going on. There's still you know,

would that gets sold nefariously. I want no part of that. And I don't think any guitar should have I don't think anything made out of wood should have any illegal wood in it. And so there's still a big concern, you know, and you look over you know, you look at some parts of the world and a hundred dollar bill will buy a lot of illegal wood. Yeah, I can imagine that. And listen the way of consumers, you know, they care about this stuff, and they're increasingly asking the

questions for me too as well. So what is this believe in music week, So it was our we had to pivot. Normally would be our traditional big international trade show as part of our trade association in Anaheim. Can't do it right, not going to happen. And Joe, the CEO of NAM said, Chris, I don't want to sit this one out, I said, Joe, we can't. He said, if we sit it out, we're going to lose people. We're going to lose the connection that our association brings to all of the tribe. And so this was our

digital show and what it's turned out to be. As Joe said the other day, he said, you know, it's not the same as a physical trade show. But boy in terms of connecting all of us. I haven't seen each other in a year. Yeah, it's done a really good job. That's Chris Martin, the fourth CEO of the Martin Guitar Company. Check out the full conversation on our podcast feed. And that wraps up the weekend edition to Bloomberg Business Week from Bloomberg Radio. Thanks so much for

joining us. I'm Carol Masser and I'm Tim stanno Ck. Be sure to tune into our Bloomberg Business Week Daily show Monday through Friday, starting at two pm Wall Street Time on Bloomberg Radio. You can also watch our daily broadcast on YouTube. Just search Bloomberg Global News and check out our Bloomberg Business Week podcast. You can find that at Bloomberg dot com, Apple or wherever you get your podcast and that's where you'll also find our extra podcast

this week. It's with Arnold Donald, Presidency of Carnival Corporation. I caught up with him at Bloomberg's The Year Ahead Summit, a gathering of leaders really to talk about what's going on this year. Or find that conversation at Bloomberg dot com, Apple, wherever you get your podcasts, And you can also see Me on Bloomberg Quick Take, available on Bloomberg dot com, slash QT and streaming platforms like Roku, Apple TV, Samsung TV and more at nine in noon every day Bloomberg

Business Week. It's available on newstands now, at Bloomberg dot com and on the Bloomberg Terminal. Have a great again, everyone. This is Bloomberg. Mhm.